RBI's steps stabilising rupee, promises more: Gokarn
Rupee has been 'relatively stable', following steps announced by RBI, deputy governor Subir Gokarn said, promising 'more measures as the need arises.'
By ET Bureau | Updated:
MUMBAI: Rupee, which slumped to a record low last week, has been ‘relatively stable’, following steps announced by the central bank, deputy governor Subir Gokarn said, promising “more measures as the need arises.”
RBI said December 15 that companies can’t enter into multiple forward contracts to cover a single overseas transaction, causing the currency to gain 1.7% the next day, the most in 19 months.
The monetary authority on Monday allowed micro finance companies to raise as much as $10 million. It also eased rules in November for companies to borrow abroad and sell foreign currencies through swaps, while offering higher deposit rates for overseas Indians.
“These are not the only measures we have,” Gokarn said. “There are other measures we can undertake to bring stability to this market. But for the moment, clearly some degree of stability has returned, and that’s important.”
The rupee has slumped 15.5% this year, making it Asia’s worst performer, as concerns the European debt crisis will deepen prompted overseas funds to sell emerging-market assets. The currency also fell on signs economic growth is slowing and the government may miss its target of narrowing its budget deficit to a four-year low of 4.6% of gross domestic product in the 12 months to March 31.
Policy makers are favoring easing capital controls to boost the supply of dollars rather than outright intervention, which Gokarn said on November 22 isn’t “an easy judgement.”
RBI said December 15 that companies can’t enter into multiple forward contracts to cover a single overseas transaction, causing the currency to gain 1.7% the next day, the most in 19 months.
The monetary authority on Monday allowed micro finance companies to raise as much as $10 million. It also eased rules in November for companies to borrow abroad and sell foreign currencies through swaps, while offering higher deposit rates for overseas Indians.
“These are not the only measures we have,” Gokarn said. “There are other measures we can undertake to bring stability to this market. But for the moment, clearly some degree of stability has returned, and that’s important.”
The rupee has slumped 15.5% this year, making it Asia’s worst performer, as concerns the European debt crisis will deepen prompted overseas funds to sell emerging-market assets. The currency also fell on signs economic growth is slowing and the government may miss its target of narrowing its budget deficit to a four-year low of 4.6% of gross domestic product in the 12 months to March 31.
Policy makers are favoring easing capital controls to boost the supply of dollars rather than outright intervention, which Gokarn said on November 22 isn’t “an easy judgement.”
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